NOG Announces Fourth Quarter and Full Year 2023 Results; Provides Detailed 2024 Guidance
- Record production of 114,363 Boe per day in Q4 2023, a 45% increase from the previous year.
- GAAP cash flow from operations of $342.4 million in Q4 2023, up by 56% from the prior year.
- Capital expenditures of $260.0 million in Q4 2023, excluding non-budgeted acquisitions.
- Increased Free Cash Flow by 19% to $103.6 million in Q4 2023 compared to the previous year.
- Oil and natural gas sales for Q4 2023 were $543.4 million, a 22% increase from the prior year.
- Declared $0.40 per share common dividend for Q1 2024, an 18% increase from Q1 2023.
- Provided 2024 guidance with projected production growth of 20% and capital spending details.
- Full year 2023 Adjusted EBITDA was $1.4 billion, a 31% increase from the prior year.
- Total proved reserves at December 31, 2023, increased by 3% to 339.7 million barrels of oil equivalent.
- NOG hedged portions of its expected production volumes to enhance cash flow predictability.
- None.
Insights
The reported increase in production and cash flow from operations for Northern Oil and Gas, Inc. (NOG) signifies a robust operational performance, particularly in a year with lower commodity prices. The 45% increase in production and 56% increase in cash flow from operations compared to the previous year underscores the company's successful scaling of operations and cost management strategies.
From a financial perspective, the substantial rise in free cash flow by 19% to $103.6 million is a positive indicator for investors, as it suggests that NOG is generating more cash than it spends, which could potentially lead to increased dividends or share buybacks. The declaration of an increased common dividend for the first quarter of 2024 also reflects the company's confidence in its financial health and commitment to shareholder returns.
However, investors should be cautious about the capital expenditures, which were above expectations for the year, driven by ground game opportunities and an acceleration of completion activity. This could be a double-edged sword, depending on the company's ability to maintain cost efficiency and commodity prices in the future.
The strategic acquisitions in the Utica and Northern Delaware Basins, as well as the successful capital raise of $290.6 million through a common stock offering, are strategic moves that could position NOG for further growth. The acquisitions enhance the company's asset portfolio and could lead to increased economies of scale.
It's important to note the shift in the oil and natural gas pricing environment. The reported differential to WTI prices and the natural gas realizations compared with Henry Hub pricing could impact profit margins. The widening of Williston Basin oil differentials and modest widening in the Permian suggest regional pricing pressures that the company may need to navigate.
NOG's hedging strategy, as detailed in the derivative contracts, is a critical aspect to consider. The hedging positions could shield the company from volatile commodity prices, providing a more predictable cash flow and potentially attracting investors who favor stability in earnings.
The increase in production expenses on a per unit basis and the expected sunset of firm transport charges by mid-2025 are operational details that have implications for the company's cost structure. The energy sector is highly sensitive to such cost fluctuations and investors often look for companies that can maintain or reduce operating costs while scaling production.
Looking at the reserves, the 3% increase in total proved reserves and the associated pre-tax PV-10 value of $5.0 billion at SEC Pricing is a strong indicator of the company's underlying asset value. The proved developed percentage of 69% suggests that a majority of NOG's reserves are currently producing or capable of production, which can be reassuring for investors looking for lower-risk energy plays.
The projected 20% production growth in 2024, along with the capital spending guidance, indicates NOG's aggressive growth strategy. However, this must be balanced with market conditions, particularly in light of the potential volatility in oil and gas prices.
FOURTH QUARTER HIGHLIGHTS
-
Production of 114,363 Boe per day (
60.2% oil), a45% increase from the fourth quarter of the prior year -
GAAP cash flow from operations of
$342.4 million $365.9 million 56% from the fourth quarter of the prior year -
Capital expenditures of
$260.0 million -
Increased Free Cash Flow (non-GAAP) by
19% to$103.6 million -
Announced and subsequently closed
Utica andNorthern Delaware acquisitions -
Raised
$290.6 million -
Declared
$0.40 18% from the first quarter of 2023 - Providing detailed 2024 production, capital spending and line-item cost guidance
MANAGEMENT COMMENTS
“NOG closed out 2023 in record fashion,” commented Nick O’Grady, NOG’s Chief Executive Officer. “Our oil and total volumes grew to all-time highs and we generated record cash flow from operations, while we saw our leverage levels decline meaningfully year over year, even in a year of lower commodity prices.”
Mr. O’Grady continued, “As we look out to 2024, our plan delivers standout
FINANCIAL RESULTS
Oil and natural gas sales for the fourth quarter were
Oil and natural gas sales for full year 2023 were
PRODUCTION
Fourth quarter production was 114,363 Boe per day, a
PRICING
During the fourth quarter, NYMEX West Texas Intermediate (“WTI”) crude oil averaged
For full year 2023, NOG’s realized oil price differential was
OPERATING COSTS
Lease operating costs were
Fourth quarter general and administrative (“G&A”) costs totaled
CAPITAL EXPENDITURES
Capital spending for the fourth quarter, excluding non-budgeted acquisitions and other items, was
LIQUIDITY, CAPITAL RESOURCES AND RECENT ACQUISITIONS
As of December 31, 2023, NOG had
In October 2023, NOG completed an underwritten public offering of 7,475,000 shares of its common stock resulting in proceeds of
On February 1, 2024, NOG announced the closings of its November 2023 acquisitions of non-operated assets in the
SHAREHOLDER RETURNS
In February 2024, NOG’s Board of Directors declared a regular quarterly cash dividend for NOG’s common stock of
In October 2023, NOG’s Board of Directors declared a regular quarterly cash dividend for NOG’s common stock of
2024 ANNUAL GUIDANCE
NOG anticipates approximately 115,000 - 120,000 Boe per day of production in 2024, an increase of approximately
|
2024 Guidance |
Annual Production (Boe per day) |
115,000 - 120,000 |
Annual Oil Production (Bbls per day) |
70,000 - 73,000 |
Total Capital Expenditures ($ in millions) |
|
Net Wells Turned-in-Line |
87.5 - 92.5 |
Net Wells Spud |
67.5 - 72.5 |
Operating Expenses and Differentials |
|
Production Expenses (per Boe) |
|
Production Taxes (as a percentage of Oil & Gas Sales) |
|
Average Differential to NYMEX WTI (per Bbl) |
( |
Average Realization as a Percentage of NYMEX Henry Hub (per Mcf) |
|
DD&A (per Boe) |
|
General and Administrative Expense (per Boe): |
|
Non-Cash |
|
Cash (excluding transaction costs on non-budgeted acquisitions) |
|
PROVED RESERVES AS OF DECEMBER 31, 2023
Total proved reserves at December 31, 2023, increased
|
SEC Pricing Proved Reserves(1) |
|||||||||||
|
Reserve Volumes |
|
PV-10(3) |
|||||||||
Reserve Category |
Oil (MBbls) |
|
Natural Gas (MMcf) |
|
Total (MBoe)(2) |
|
% |
|
Amount (In thousands) |
|
% |
|
PDP Properties |
118,634 |
|
662,079 |
|
228,981 |
|
67 |
|
$ |
3,899,733 |
|
78 |
PDNP Properties |
3,230 |
|
15,899 |
|
5,880 |
|
2 |
|
|
113,577 |
|
2 |
PUD Properties |
48,477 |
|
338,138 |
|
104,833 |
|
31 |
|
|
990,772 |
|
20 |
Total |
170,341 |
|
1,016,116 |
|
339,694 |
|
100 |
|
$ |
5,004,082 |
|
100 |
________________ |
|
(1) |
The SEC Pricing Proved Reserves table above values oil and natural gas reserve quantities and related discounted future net cash flows as of December 31, 2023, based on average prices of |
(2) |
Boe are computed based on a conversion ratio of one Boe for each barrel of oil and one Boe for every 6,000 cubic feet (i.e., 6 Mcf) of natural gas. |
(3) |
Pre-tax PV10%, or “PV-10,” may be considered a non-GAAP financial measure as defined by the SEC. See “Non-GAAP Financial Measures” below. |
FOURTH QUARTER 2023 RESULTS |
||||||||||
The following table sets forth selected operating and financial data for the periods indicated. |
||||||||||
|
Three Months Ended December 31, |
|||||||||
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
Net Production: |
|
|
|
|
|
|||||
Oil (Bbl) |
|
6,336,158 |
|
|
|
4,314,547 |
|
|
47 |
% |
Natural Gas and NGLs (Mcf) |
|
25,111,394 |
|
|
|
17,640,202 |
|
|
42 |
% |
Total (Boe) |
|
10,521,390 |
|
|
|
7,254,581 |
|
|
45 |
% |
|
|
|
|
|
|
|||||
Average Daily Production: |
|
|
|
|
|
|||||
Oil (Bbl) |
|
68,871 |
|
|
|
46,897 |
|
|
47 |
% |
Natural Gas and NGL (Mcf) |
|
272,950 |
|
|
|
191,741 |
|
|
42 |
% |
Total (Boe) |
|
114,363 |
|
|
|
78,854 |
|
|
45 |
% |
|
|
|
|
|
|
|||||
Average Sales Prices: |
|
|
|
|
|
|||||
Oil (per Bbl) |
$ |
74.51 |
|
|
$ |
80.23 |
|
|
(7 |
)% |
Effect of Loss on Settled Derivatives on Average Price (per Bbl) |
|
(0.85 |
) |
|
|
(12.03 |
) |
|
|
|
Oil Net of Settled Derivatives (per Bbl) |
|
73.66 |
|
|
|
68.20 |
|
|
8 |
% |
|
|
|
|
|
|
|||||
Natural Gas and NGLs (per Mcf) |
$ |
2.84 |
|
|
$ |
5.64 |
|
|
(50 |
)% |
Effect of Gain (Loss) on Settled Derivatives on Average Price (per Mcf) |
|
0.68 |
|
|
|
(0.63 |
) |
|
|
|
Natural Gas Net of Settled Derivatives (per Mcf) |
|
3.52 |
|
|
|
5.01 |
|
|
(30 |
)% |
|
|
|
|
|
|
|||||
Realized Price on a Boe Basis Excluding Settled Commodity Derivatives |
$ |
51.65 |
|
|
$ |
61.43 |
|
|
(16 |
)% |
Effect of Gain (Loss) on Settled Commodity Derivatives on Average Price (per Boe) |
|
1.12 |
|
|
|
(8.69 |
) |
|
|
|
Realized Price on a Boe Basis Including Settled Commodity Derivatives |
|
52.77 |
|
|
|
52.74 |
|
|
— |
% |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
Costs and Expenses (per Boe): |
|
|
|
|
|
|||||
Production Expenses |
$ |
9.70 |
|
|
$ |
10.06 |
|
|
(4 |
)% |
Production Taxes |
|
4.36 |
|
|
|
5.16 |
|
|
(16 |
)% |
General and Administrative Expense |
|
0.91 |
|
|
|
2.07 |
|
|
(56 |
)% |
Depletion, Depreciation, Amortization and Accretion |
|
14.37 |
|
|
|
10.66 |
|
|
35 |
% |
|
|
|
|
|
|
|||||
Net Producing Wells at Period End |
|
951.6 |
|
|
|
799.3 |
|
|
19 |
% |
FULL YEAR 2023 RESULTS |
||||||||||
The following table sets forth selected operating and financial data for the periods indicated. |
||||||||||
|
Years Ended December 31, |
|||||||||
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
Net Production: |
|
|
|
|
|
|||||
Oil (Bbl) |
|
22,012,986 |
|
|
|
16,090,072 |
|
|
37 |
% |
Natural Gas and NGLs (Mcf) |
|
84,341,858 |
|
|
|
68,829,142 |
|
|
23 |
% |
Total (Boe) |
|
36,069,962 |
|
|
|
27,561,596 |
|
|
31 |
% |
|
|
|
|
|
|
|||||
Average Daily Production: |
|
|
|
|
|
|||||
Oil (Bbl) |
|
60,310 |
|
|
|
44,082 |
|
|
37 |
% |
Natural Gas and NGL (Mcf) |
|
231,074 |
|
|
|
188,573 |
|
|
23 |
% |
Total (Boe) |
|
98,822 |
|
|
|
75,511 |
|
|
31 |
% |
|
|
|
|
|
|
|||||
Average Sales Prices: |
|
|
|
|
|
|||||
Oil (per Bbl) |
$ |
74.78 |
|
|
$ |
91.65 |
|
|
(18 |
) % |
Effect of Loss on Settled Oil Derivatives on Average Price (per Bbl) |
|
(0.90 |
) |
|
|
(21.48 |
) |
|
|
|
Oil Net of Settled Oil Derivatives (per Bbl) |
|
73.88 |
|
|
|
70.17 |
|
|
5 |
% |
|
|
|
|
|
|
|||||
Natural Gas and NGLs (per Mcf) |
|
2.98 |
|
|
|
7.43 |
|
|
(60 |
) % |
Effect of Gain (Loss) on Settled Natural Gas Derivatives on Average Price (per Mcf) |
|
0.92 |
|
|
|
(1.60 |
) |
|
|
|
Natural Gas and NGLs Net of Settled Natural Gas Derivatives (per Mcf) |
|
3.90 |
|
|
|
5.83 |
|
|
(33 |
) % |
|
|
|
|
|
|
|||||
Realized Price on a Boe Basis Excluding Settled Commodity Derivatives |
|
52.61 |
|
|
|
72.05 |
|
|
(27 |
) % |
Effect of Gain (Loss) on Settled Commodity Derivatives on Average Price (per Boe) |
|
1.61 |
|
|
|
(16.52 |
) |
|
|
|
Realized Price on a Boe Basis Including Settled Commodity Derivatives |
|
54.22 |
|
|
|
55.53 |
|
|
(2 |
|
|
|
|
|
|
|
|||||
Costs and Expenses (per Boe): |
|
|
|
|
|
|||||
Production Expenses |
$ |
9.62 |
|
|
$ |
9.46 |
|
|
2 |
% |
Production Taxes |
|
4.44 |
|
|
|
5.74 |
|
|
(23 |
) % |
General and Administrative Expenses |
|
1.30 |
|
|
|
1.71 |
|
|
(24 |
) % |
Depletion, Depreciation, Amortization and Accretion |
|
13.47 |
|
|
|
9.12 |
|
|
48 |
% |
|
|
|
|
|
|
|||||
Net Producing Wells at Period-End |
|
951.6 |
|
|
|
799.3 |
|
|
19 |
% |
HEDGING |
||||||||||||
NOG hedges portions of its expected production volumes to increase the predictability of its cash flow and to help maintain a strong financial position. The following table summarizes NOG’s open crude oil commodity derivative swap contracts scheduled to settle after December 31, 2023. |
||||||||||||
|
|
Crude Oil Commodity Derivative Swaps(1) |
|
Crude Oil Commodity Derivative Collars and Puts |
||||||||
Contract Period |
|
Volume (Bbls/Day) |
|
Weighted Average Price ($/Bbl) |
|
Collar Call Volume (Bbls/Day) |
|
Weighted Average Collar Call Prices ($/Bbl) |
|
Collar Put Volume (Bbls/Day) |
|
Weighted Average Collar Put Prices ($/Bbl) |
2024: |
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
23,417 |
|
|
|
26,628 |
|
|
|
20,972 |
|
|
Q2 |
|
25,503 |
|
|
|
28,139 |
|
|
|
21,083 |
|
|
Q3 |
|
24,621 |
|
|
|
18,751 |
|
|
|
17,101 |
|
|
Q4 |
|
24,469 |
|
|
|
15,617 |
|
|
|
13,726 |
|
|
2025: |
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
15,808 |
|
|
|
4,592 |
|
|
|
3,498 |
|
|
Q2 |
|
15,589 |
|
|
|
3,002 |
|
|
|
2,189 |
|
|
Q3 |
|
6,004 |
|
|
|
2,554 |
|
|
|
1,761 |
|
|
Q4 |
|
5,966 |
|
|
|
2,266 |
|
|
|
1,473 |
|
|
2026: |
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
2,930 |
|
69.05 |
|
480 |
|
|
|
437 |
|
|
Q2 |
|
2,930 |
|
68.98 |
|
480 |
|
|
|
437 |
|
|
Q3 |
|
2,930 |
|
68.91 |
|
480 |
|
|
|
437 |
|
|
Q4 |
|
2,930 |
|
68.83 |
|
480 |
|
|
|
437 |
|
|
________________ |
|
(1) |
Includes derivative contracts entered into through February 22, 2024. This table does not include volumes subject to swaptions and call options, which are crude oil derivative contracts NOG has entered into which may increase swapped volumes at the option of NOG’s counterparties. This table also does not include basis swaps. For additional information, see Note 11 to our financial statements included in our Form 10-K filed with the SEC for the year ended December 31, 2023. |
The following table summarizes NOG’s open natural gas commodity derivative swap contracts scheduled to settle after December 31, 2023. |
||||||||||||
|
|
Natural Gas Commodity Derivative Swaps(1) |
|
Natural Gas Commodity Derivative Collars |
||||||||
Contract Period |
|
Volume (MMBTU/Day) |
|
Weighted Average Price ($/MMBTU) |
|
Collar Call Volume (MMBTU/Day) |
|
Weighted Average Collar Call Prices ($/MMBTU) |
|
Collar Put Volume (MMBTU/Day) |
|
Weighted Average Collar Put Prices ($/MMBTU) |
|
|
|
|
|
|
|
|
|
|
|
|
|
2024: |
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
117,161 |
|
|
|
65,330 |
|
|
|
65,330 |
|
|
Q2 |
|
119,514 |
|
|
|
75,852 |
|
|
|
75,852 |
|
|
Q3 |
|
118,048 |
|
|
|
80,000 |
|
|
|
80,000 |
|
|
Q4 |
|
83,890 |
|
|
|
88,876 |
|
|
|
88,876 |
|
|
2025: |
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
16,500 |
|
|
|
102,182 |
|
|
|
102,182 |
|
|
Q2 |
|
10,110 |
|
|
|
96,388 |
|
|
|
96,388 |
|
|
Q3 |
|
10,000 |
|
|
|
91,387 |
|
|
|
91,387 |
|
|
Q4 |
|
8,261 |
|
|
|
82,812 |
|
|
|
82,812 |
|
|
2026: |
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
5,000 |
|
|
|
64,758 |
|
|
|
64,758 |
|
|
Q2 |
|
5,055 |
|
|
|
66,206 |
|
|
|
66,206 |
|
|
Q3 |
|
5,000 |
|
|
|
65,486 |
|
|
|
65,486 |
|
|
Q4 |
|
4,946 |
|
|
|
46,790 |
|
|
|
46,790 |
|
|
________________ |
|
(1) |
Includes derivative contracts entered into through February 22, 2024. This table does not include volumes subject to swaptions and call options, which are natural gas derivative contracts NOG has entered into which may increase swapped volumes at the option of NOG’s counterparties. This table also does not include basis swaps. For additional information, see Note 11 to our financial statements included in our Form 10-K filed with the SEC for the year ended December 31, 2023. |
The following table presents NOG’s settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented, which is included in the revenue section of NOG’s statement of operations: |
|||||||||||||
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||
(In thousands) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
Cash Received (Paid) on Settled Derivatives |
$ |
11,820 |
|
$ |
(63,064 |
) |
|
$ |
57,919 |
|
$ |
(455,450 |
) |
Non-Cash Mark-to-Market Gain (Loss) on Derivatives |
|
235,553 |
|
|
(12,203 |
) |
|
|
201,331 |
|
|
40,187 |
|
Gain (Loss) on Commodity Derivatives, Net |
$ |
247,373 |
|
$ |
(75,268 |
) |
|
$ |
259,250 |
|
$ |
(415,262 |
) |
CAPITAL EXPENDITURES & DRILLING ACTIVITY |
||||
(In millions, except for net well data) |
|
Three Months Ended December 31, 2023 |
|
Year Ended December 31, 2023 |
Capital Expenditures Incurred: |
|
|
|
|
Organic Drilling and Development Capital Expenditures |
|
|
|
|
Ground Game Drilling and Development Capital Expenditures |
|
|
|
|
Ground Game Acquisition Capital Expenditures |
|
|
|
|
Other |
|
|
|
|
Non-Budgeted Acquisitions |
|
|
|
|
|
|
|
|
|
Net Wells Turned In Line |
|
27.6 |
|
76.6 |
|
|
|
|
|
Net Producing Wells (Period-End) |
|
|
|
951.6 |
|
|
|
|
|
Net Wells in Process (Period-End) |
|
|
|
66.5 |
Change in Wells in Process over Prior Period |
|
(7.6) |
|
11.1 |
|
|
|
|
|
Weighted Average AFE for Wells Elected to |
|
|
|
|
Capitalized costs are a function of the number of net well additions during the period, and changes in wells in process from the prior year-end. Capital expenditures attributable to the increase of 11.1 in net wells in process during the year ended December 31, 2023 are reflected in the annual amounts incurred for drilling and development capital expenditures.
ACREAGE
As of December 31, 2023, NOG controlled leasehold of approximately 272,251 net acres in the Williston, Permian and Appalachian Basins in
FOURTH QUARTER 2023 EARNINGS RELEASE CONFERENCE CALL
In conjunction with NOG’s release of its financial and operating results, investors, analysts and other interested parties are invited to listen to a conference call with management on Friday, February 23, 2024 at 8:00 a.m. Central Time.
Those wishing to listen to the conference call may do so via the company’s website, www.noginc.com, or by phone as follows:
Webcast: https://events.q4inc.com/attendee/329042393
Dial-In Number: (888) 340-5044 (US/
Conference ID: 9661789 - Fourth Quarter and Year-End 2023 Earnings Conference Call
Replay Dial-In Number: (800) 770-2030 (US/
Replay Access Code: 9661789 - Replay will be available through March 8, 2024
ABOUT NORTHERN OIL AND GAS
NOG is a real asset company with a primary strategy of acquiring and investing in non-operated minority working and mineral interests in the premier hydrocarbon producing basins within the contiguous
SAFE HARBOR
This press release contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical facts included in this release regarding NOG’s financial position, operating and financial performance, business strategy, dividend plans and practices, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements. When used in this release, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future production and sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond NOG’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: changes in crude oil and natural gas prices, the pace of drilling and completions activity on NOG’s current properties and properties pending acquisition, infrastructure constraints and related factors affecting NOG’s properties; cost inflation or supply chain disruptions, ongoing legal disputes over and potential shutdown of the Dakota Access Pipeline; NOG’s ability to acquire additional development opportunities, potential or pending acquisition transactions, the projected capital efficiency savings and other operating efficiencies and synergies resulting from NOG’s acquisition transactions, integration and benefits of property acquisitions, or the effects of such acquisitions on NOG’s cash position and levels of indebtedness; changes in NOG’s reserves estimates or the value thereof, disruption to NOG’s business due to acquisitions and other significant transactions; general economic or industry conditions, nationally and/or in the communities in which NOG conducts business; changes in the interest rate environment, legislation or regulatory requirements; conditions of the securities markets; risks associated with NOG’s Convertible Notes, including the potential impact that the Convertible Notes may have NOG’s financial position and liquidity, potential dilution, and that provisions of the Convertible Notes could delay or prevent a beneficial takeover of NOG; the potential impact of the capped call transaction undertaken in tandem with the Convertible Notes issuance, including counterparty risk; increasing attention to environmental, social and governance matters; NOG’s ability to consummate any pending acquisition transactions; other risks and uncertainties related to the closing of pending acquisition transactions; NOG’s ability to raise or access capital; cyber-incidents could have a material adverse effect NOG’s business, financial condition or results of operations; changes in accounting principles, policies or guidelines; events beyond NOG’s control, including a global or domestic health crisis, acts of terrorism, political or economic instability or armed conflict in oil and gas producing regions; and other economic, competitive, governmental, regulatory and technical factors affecting NOG’s operations, products and prices. Additional information concerning potential factors that could affect future results is included in the section entitled “Item 1A. Risk Factors” and other sections of NOG’s more recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as updated from time to time in amendments and subsequent reports filed with the SEC, which describe factors that could cause NOG’s actual results to differ from those set forth in the forward-looking statements.
NOG has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond NOG’s control. NOG does not undertake any duty to update or revise any forward-looking statements, except as may be required by the federal securities laws.
NORTHERN OIL AND GAS, INC.
|
|||||||||||||||
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
(In thousands, except share and per share data) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
|
|
|
|
|
|
|
||||||||
Oil and Gas Sales |
$ |
543,403 |
|
|
$ |
445,647 |
|
|
$ |
1,897,779 |
|
|
$ |
1,985,798 |
|
Gain (Loss) on Commodity Derivatives, Net |
|
247,373 |
|
|
|
(75,268 |
) |
|
|
259,250 |
|
|
|
(415,262 |
) |
Other Revenue |
|
2,741 |
|
|
|
— |
|
|
|
9,230 |
|
|
|
— |
|
Total Revenues |
|
793,517 |
|
|
|
370,379 |
|
|
|
2,166,259 |
|
|
|
1,570,535 |
|
|
|
|
|
|
|
|
|
||||||||
Operating Expenses |
|
|
|
|
|
|
|
||||||||
Production Expenses |
|
102,061 |
|
|
|
73,017 |
|
|
|
347,006 |
|
|
|
260,676 |
|
Production Taxes |
|
45,903 |
|
|
|
37,465 |
|
|
|
160,118 |
|
|
|
158,194 |
|
General and Administrative Expenses |
|
9,553 |
|
|
|
15,045 |
|
|
|
46,801 |
|
|
|
47,201 |
|
Depletion, Depreciation, Amortization and Accretion |
|
151,188 |
|
|
|
77,317 |
|
|
|
486,024 |
|
|
|
251,272 |
|
Other Expenses |
|
768 |
|
|
|
— |
|
|
|
4,448 |
|
|
|
— |
|
Total Operating Expenses |
|
309,473 |
|
|
|
202,844 |
|
|
|
1,044,397 |
|
|
|
717,343 |
|
|
|
|
|
|
|
|
|
||||||||
Income From Operations |
|
484,044 |
|
|
|
167,535 |
|
|
|
1,121,862 |
|
|
|
853,192 |
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense) |
|
|
|
|
|
|
|
||||||||
Interest Expense, Net of Capitalization |
|
(36,513 |
) |
|
|
(23,808 |
) |
|
|
(135,664 |
) |
|
|
(80,331 |
) |
Gain (Loss) on Interest Rate Derivatives, Net |
|
— |
|
|
|
(779 |
) |
|
|
(1,017 |
) |
|
|
993 |
|
Gain on the Extinguishment of Debt, Net |
|
— |
|
|
|
235 |
|
|
|
659 |
|
|
|
810 |
|
Contingent Consideration Gain |
|
— |
|
|
|
1,859 |
|
|
|
10,107 |
|
|
|
1,859 |
|
Other Income (Expense) |
|
83 |
|
|
|
— |
|
|
|
4,795 |
|
|
|
(185 |
) |
Total Other Income (Expense) |
|
(36,430 |
) |
|
|
(22,493 |
) |
|
|
(121,120 |
) |
|
|
(76,854 |
) |
|
|
|
|
|
|
|
|
||||||||
Income Before Income Taxes |
|
447,614 |
|
|
|
145,042 |
|
|
|
1,000,742 |
|
|
|
776,338 |
|
|
|
|
|
|
|
|
|
||||||||
Income Tax Expense (Benefit) |
|
58,761 |
|
|
|
(27 |
) |
|
|
77,773 |
|
|
|
3,101 |
|
|
|
|
|
|
|
|
|
||||||||
Net Income |
|
388,853 |
|
|
|
145,068 |
|
|
|
922,969 |
|
|
$ |
773,237 |
|
|
|
|
|
|
|
|
|
||||||||
Cumulative Preferred Stock Dividend |
|
— |
|
|
|
(1,367 |
) |
|
|
— |
|
|
|
(9,803 |
) |
|
|
|
|
|
|
|
|
||||||||
Premium on Repurchase of Preferred Stock |
|
— |
|
|
|
(10,411 |
) |
|
|
— |
|
|
|
(35,731 |
) |
|
|
|
|
|
|
|
|
||||||||
Net Income Attributable to Common Shareholders |
$ |
388,853 |
|
|
$ |
133,291 |
|
|
$ |
922,969 |
|
|
$ |
727,703 |
|
|
|
|
|
|
|
|
|
||||||||
Net Income Per Common Share – Basic |
$ |
3.92 |
|
|
$ |
1.64 |
|
|
$ |
10.09 |
|
|
$ |
9.26 |
|
Net Income Per Common Share – Diluted |
$ |
3.90 |
|
|
$ |
1.63 |
|
|
$ |
10.03 |
|
|
$ |
8.92 |
|
Weighted Average Common Shares Outstanding – Basic |
|
99,278,050 |
|
|
|
81,301,477 |
|
|
|
91,483,687 |
|
|
|
78,557,216 |
|
Weighted Average Common Shares Outstanding – Diluted |
|
99,814,411 |
|
|
|
81,857,034 |
|
|
|
92,060,947 |
|
|
|
86,675,365 |
|
NORTHERN OIL AND GAS, INC.
|
|||||||
(In thousands, except par value and share data) |
December 31, 2023 |
|
December 31, 2022 |
||||
Assets |
|
|
|
||||
Current Assets: |
|
|
|
||||
Cash and Cash Equivalents |
$ |
8,195 |
|
|
$ |
2,528 |
|
Accounts Receivable, Net |
|
370,531 |
|
|
|
271,336 |
|
Advances to Operators |
|
49,210 |
|
|
|
8,976 |
|
Prepaid Expenses and Other |
|
2,489 |
|
|
|
2,014 |
|
Derivative Instruments |
|
75,733 |
|
|
|
35,293 |
|
Income Tax Receivable |
|
3,249 |
|
|
|
338 |
|
Total Current Assets |
|
509,407 |
|
|
|
320,485 |
|
|
|
|
|
||||
Property and Equipment: |
|
|
|
||||
Oil and Natural Gas Properties, Full Cost Method of Accounting |
|
|
|
||||
Proved |
|
8,428,518 |
|
|
|
6,492,683 |
|
Unproved |
|
36,785 |
|
|
|
41,565 |
|
Other Property and Equipment |
|
8,069 |
|
|
|
6,858 |
|
Total Property and Equipment |
|
8,473,372 |
|
|
|
6,541,106 |
|
Less – Accumulated Depreciation, Depletion and Impairment |
|
(4,541,808 |
) |
|
|
(4,058,180 |
) |
Total Property and Equipment, Net |
|
3,931,563 |
|
|
|
2,482,926 |
|
|
|
|
|
||||
Derivative Instruments |
|
10,725 |
|
|
|
12,547 |
|
Acquisition Deposit |
|
17,094 |
|
|
|
43,000 |
|
Other Noncurrent Assets, Net |
|
15,466 |
|
|
|
16,220 |
|
|
|
|
|
||||
Total Assets |
$ |
4,484,255 |
|
|
$ |
2,875,178 |
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current Liabilities: |
|
|
|
||||
Accounts Payable |
$ |
192,672 |
|
|
$ |
128,582 |
|
Accrued Liabilities |
|
147,943 |
|
|
|
121,737 |
|
Accrued Interest |
|
26,219 |
|
|
|
24,347 |
|
Derivative Instruments |
|
16,797 |
|
|
|
58,418 |
|
Contingent Consideration |
|
— |
|
|
|
10,107 |
|
Other Current Liabilities |
|
2,130 |
|
|
|
1,781 |
|
Total Current Liabilities |
|
385,761 |
|
|
|
344,972 |
|
|
|
|
|
||||
Long-term Debt, Net |
|
1,835,554 |
|
|
|
1,525,413 |
|
Derivative Instruments |
|
105,831 |
|
|
|
225,905 |
|
Deferred Tax Liability |
|
68,488 |
|
|
|
— |
|
Asset Retirement Obligations |
|
38,203 |
|
|
|
31,582 |
|
Other Noncurrent Liabilities |
|
2,741 |
|
|
|
2,045 |
|
|
|
|
|
||||
Total Liabilities |
$ |
2,436,578 |
|
|
$ |
2,129,917 |
|
|
|
|
|
||||
Commitments and Contingencies |
|
|
|
||||
|
|
|
|
||||
Stockholders’ Equity |
|
|
|
||||
Common Stock, Par Value 100,761,148 Shares Outstanding at 12/31/2023 85,165,807 Shares Outstanding at 12/31/2022 |
|
503 |
|
|
|
487 |
|
Additional Paid-In Capital |
|
2,124,963 |
|
|
|
1,745,532 |
|
Retained Deficit |
|
(77,790 |
) |
|
|
(1,000,759 |
) |
Total Stockholders’ Equity |
|
2,047,676 |
|
|
|
745,260 |
|
Total Liabilities and Stockholders’ Equity |
$ |
4,484,255 |
|
|
$ |
2,875,178 |
|
Non-GAAP Financial Measures
Adjusted Net Income, Adjusted EBITDA and Free Cash Flow are non-GAAP measures. Net income (loss) is the most directly comparable GAAP measure for both Adjusted Net Income and Adjusted EBITDA. Cash flows from operations is the most directly comparable GAAP measure for Free Cash Flow. NOG defines Adjusted Net Income (Loss) as net income (loss) excluding (i) (gain) loss on unsettled commodity derivatives, net of tax, (ii) (gain) loss on the extinguishment of debt, net of tax, (iii) (gain) loss on unsettled interest rate derivatives, net of tax, (iv) contingent consideration (gain) loss, net of tax, and (v) acquisition transaction costs, net of tax. NOG defines Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) income taxes, (iii) depreciation, depletion, amortization, and accretion, (iv) non-cash stock based compensation expense, (v) (gain) loss on the extinguishment of debt, (vi) contingent consideration (gain) loss, (vii) acquisition transaction expense, (viii) (gain) loss on unsettled interest rate derivatives, and (ix)(gain) loss on unsettled commodity derivatives. NOG defines Free Cash Flow as cash flows from operations before changes in working capital and other items, less (i) capital expenditures, excluding non-budgeted acquisitions and (ii) preferred stock dividends. A reconciliation of each of these measures to the most directly comparable GAAP measure is included below.
A reconciliation of each of these measures to the most directly comparable GAAP measure is included below. Management believes the use of these non-GAAP financial measures provides useful information to investors to gain an overall understanding of current financial performance. Specifically, management believes the non-GAAP financial measures included herein provide useful information to both management and investors by excluding certain items that management believes are not indicative of NOG’s core operating results. In addition, these non-GAAP financial measures are used by management for budgeting and forecasting as well as subsequently measuring NOG’s performance, and management believes it is providing investors with financial measures that most closely align to its internal measurement processes.
Pre-tax PV10%, or PV-10, may be considered a non-GAAP financial measure as defined by the SEC and is derived from the standardized measure of discounted future net cash flows, which is the most directly comparable GAAP measure for proved reserves calculated using SEC pricing. PV-10 is a computation of the Standardized Measure of discounted future net cash flows on a pre-tax basis. PV-10 is equal to the Standardized Measure of discounted future net cash flows at the applicable date, before deducting future income taxes, discounted at 10 percent. Management believes that the presentation of PV-10 is relevant and useful to investors because it presents the discounted future net cash flows attributable to NOG’s estimated net proved reserves prior to taking into account future corporate income taxes, and it is a useful measure for evaluating the relative monetary significance of NOG’s oil and natural gas properties. Further, investors may utilize the measure as a basis for comparison of the relative size and value of NOG’s reserves to other companies. Management uses this measure when assessing the potential return on investment related to NOG’s oil and natural gas properties. PV-10, however, is not a substitute for the Standardized Measure of discounted future net cash flows. A reconciliation of PV-10 to the Standardized Measure is included below.
Reconciliation of Adjusted Net Income |
|||||||||||||||
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
(In thousands, except share and per share data) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Income Before Taxes |
$ |
447,614 |
|
|
$ |
145,068 |
|
|
$ |
1,000,742 |
|
|
$ |
776,338 |
|
Add: |
|
|
|
|
|
|
|
||||||||
Impact of Selected Items: |
|
|
|
|
|
|
|
||||||||
(Gain) Loss on Unsettled Commodity Derivatives |
|
(235,553 |
) |
|
|
12,203 |
|
|
|
(201,331 |
) |
|
|
(40,187 |
) |
Gain on the Extinguishment of Debt |
|
— |
|
|
|
(235 |
) |
|
|
(659 |
) |
|
|
(810 |
) |
(Gain) Loss on Unsettled Interest Rate Derivatives |
|
— |
|
|
|
779 |
|
|
|
1,017 |
|
|
|
(993 |
) |
Contingent Consideration Gain |
|
— |
|
|
|
(1,859 |
) |
|
|
(10,107 |
) |
|
|
(1,859 |
) |
Acquisition Transaction Costs |
|
765 |
|
|
|
6,299 |
|
|
|
11,243 |
|
|
|
16,593 |
|
Adjusted Income Before Adjusted Income Tax Expense |
|
212,827 |
|
|
|
162,229 |
|
|
|
800,905 |
|
|
|
749,082 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Income Tax Expense (1) |
|
(52,143 |
) |
|
|
(39,746 |
) |
|
|
(196,222 |
) |
|
|
(183,525 |
) |
|
|
|
|
|
|
|
|
||||||||
Adjusted Net Income (non-GAAP) |
$ |
160,684 |
|
|
$ |
122,483 |
|
|
$ |
604,683 |
|
|
$ |
565,557 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Shares Outstanding – Basic |
|
99,278,050 |
|
|
|
81,301,477 |
|
|
|
91,483,687 |
|
|
|
78,557,216 |
|
Weighted Average Shares Outstanding – Diluted |
|
99,814,411 |
|
|
|
85,545,405 |
|
|
|
92,060,947 |
|
|
|
86,675,365 |
|
Less: |
|
|
|
|
|
|
|
||||||||
Dilutive Effect of Convertible Notes (2) |
|
— |
|
|
|
— |
|
|
|
108,564 |
|
|
|
— |
|
Weighted Average Shares Outstanding – Adjusted Diluted |
|
99,814,411 |
|
|
|
85,545,405 |
|
|
|
91,952,383 |
|
|
|
86,675,365 |
|
|
|
|
|
|
|
|
|
||||||||
Income Before Income Taxes Per Common Share – Basic |
$ |
4.51 |
|
|
$ |
1.78 |
|
|
$ |
10.94 |
|
|
$ |
9.88 |
|
Add: |
|
|
|
|
|
|
|
||||||||
Impact of Selected Items |
|
(2.36 |
) |
|
|
0.21 |
|
|
|
(2.18 |
) |
|
|
(0.35 |
) |
Impact of Income Tax |
|
(0.53 |
) |
|
|
(0.48 |
) |
|
|
(2.15 |
) |
|
|
(2.33 |
) |
Adjusted Net Income Per Common Share – Basic |
$ |
1.62 |
|
|
$ |
1.51 |
|
|
$ |
6.61 |
|
|
$ |
7.20 |
|
|
|
|
|
|
|
|
|
||||||||
Income Before Income Taxes Per Common Share – Adjusted Diluted |
$ |
4.48 |
|
|
$ |
1.70 |
|
|
$ |
10.88 |
|
|
$ |
8.96 |
|
Add: |
|
|
|
|
|
|
|
||||||||
Impact of Selected Items |
|
(2.35 |
) |
|
|
0.20 |
|
|
|
(2.17 |
) |
|
|
(0.31 |
) |
Impact of Income Tax |
|
(0.52 |
) |
|
|
(0.47 |
) |
|
|
(2.13 |
) |
|
|
(2.12 |
) |
Adjusted Net Income Per Common Share – Adjusted Diluted |
$ |
1.61 |
|
|
$ |
1.43 |
|
|
$ |
6.58 |
|
|
$ |
6.53 |
|
________________ |
|
(1) |
For the 2023 columns, this represents a tax impact using an estimated tax rate of |
(2) |
Weighted average shares outstanding - diluted, on a GAAP basis, includes diluted shares attributable to the Company’s Convertible Notes due 2029. However, the offsetting impact of the capped call transactions that the Company entered into in connection therewith is not recognized on a GAAP basis. As a result, for purposes of this calculation, the Company excludes the dilutive shares to the extent they would be offset by the capped calls. |
Reconciliation of Adjusted EBITDA |
|||||||||||||||
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
(In thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net Income |
$ |
388,853 |
|
|
$ |
145,068 |
|
|
$ |
922,969 |
|
|
$ |
773,237 |
|
Add: |
|
|
|
|
|
|
|
||||||||
Interest Expense |
|
36,513 |
|
|
|
23,808 |
|
|
|
135,664 |
|
|
|
80,331 |
|
Income Tax Provision (Benefit) |
|
58,761 |
|
|
|
(27 |
) |
|
|
77,773 |
|
|
|
3,101 |
|
Depreciation, Depletion, Amortization and Accretion |
|
151,188 |
|
|
|
77,317 |
|
|
|
486,024 |
|
|
|
251,272 |
|
Non-Cash Stock-Based Compensation |
|
1,181 |
|
|
|
1,447 |
|
|
|
5,660 |
|
|
|
5,656 |
|
Gain on the Extinguishment of Debt |
|
— |
|
|
|
(235 |
) |
|
|
(659 |
) |
|
|
(810 |
) |
Contingent Consideration Gain |
|
— |
|
|
|
(1,859 |
) |
|
|
(10,107 |
) |
|
|
(1,859 |
) |
Acquisition Transaction Costs |
|
765 |
|
|
|
6,299 |
|
|
|
11,243 |
|
|
|
16,593 |
|
(Gain) Loss on Unsettled Interest Rate Derivatives |
|
— |
|
|
|
779 |
|
|
|
1,017 |
|
|
|
(993 |
) |
(Gain) Loss on Unsettled Commodity Derivatives |
|
(235,553 |
) |
|
|
12,203 |
|
|
|
(201,331 |
) |
|
|
(40,187 |
) |
Adjusted EBITDA |
$ |
401,708 |
|
|
$ |
264,800 |
|
|
$ |
1,428,254 |
|
|
$ |
1,086,341 |
|
Reconciliation of Free Cash Flow |
|||
|
Three Months Ended December 31, |
||
(In thousands) |
|
2023 |
|
Net Cash Provided by Operating Activities |
$ |
342,362 |
|
Exclude: Changes in Working Capital and Other Items |
|
23,549 |
|
Less: Capital Expenditures (1) |
|
(262,277 |
) |
Free Cash Flow |
$ |
103,634 |
|
________________ |
|
(1) |
Capital expenditures are calculated as follows: |
|
Three Months Ended December 31, |
||
(In thousands) |
|
2023 |
|
Cash Paid for Capital Expenditures |
$ |
377,495 |
|
Less: Non-Budgeted Acquisitions |
|
(47,643 |
) |
Plus: Change in Accrued Capital Expenditures and Other |
|
(67,575 |
) |
Capital Expenditures |
$ |
262,277 |
|
Reconciliation of PV-10 |
|||
The following table reconciles the pre-tax PV10% value of our SEC Pricing Proved Reserves as of December 31, 2023 to the Standardized Measure of discounted future net cash flows. |
|||
SEC Pricing Proved Reserves (In thousands) |
|||
Standardized Measure Reconciliation |
|||
Pre-Tax Present Value of Estimated Future Net Revenues (Pre-Tax PV10%) |
$ |
5,004,082 |
|
Future Income Taxes, Discounted at |
|
(847,845 |
) |
Standardized Measure of Discounted Future Net Cash Flows |
$ |
4,156,237 |
|
________________ |
|
(1) |
The expected tax benefits to be realized from utilization of the net operating loss and tax credit carryforwards are used in the computation of future income tax cash flows. As a result of available net operating loss carryforwards and the remaining tax basis of our assets at December 31, 2023, our future income taxes were significantly reduced. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240222148219/en/
Evelyn Infurna
Vice President of Investor Relations
952-476-9800
ir@northernoil.com
Source: Northern Oil and Gas, Inc.
FAQ
What was NOG's production in the fourth quarter of 2023?
How much did NOG raise in net proceeds from a Common Stock offering in October 2023?
What was the increase in Adjusted Net Income for Q4 2023 compared to the prior year period?
What is NOG's 2024 production guidance?
How did NOG's full year 2023 Adjusted EBITDA compare to the prior year?
What was the total proved reserves at December 31, 2023?
Why does NOG hedge portions of its expected production volumes?
